Northern Venture Trust Regulatory News (NVT)

12 Nov 2007 16:37

Northern Venture Trust PLC12 November 2007 12 NOVEMBER 2007 NORTHERN VENTURE TRUST PLC RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 Northern Venture Trust PLC is a Venture Capital Trust (VCT) managed by NVMPrivate Equity. The trust was one of the first VCTs launched on the LondonStock Exchange in 1995. It invests mainly in UK unquoted companies and aims toprovide high long-term tax-free returns to shareholders through a combination ofdividend yield and capital growth. Financial highlights:(comparative figures as at 30 September 2006 in italics) 2007 2006ORDINARY SHARES • Net assets £33.6m £33.1m • Net asset value per share 87.6p 85.7p • Return per share Revenue 2.4p 2.8p Capital 8.4p 5.8p Total 10.8p 8.6p • Dividend per share declared in respect of the year Revenue 2.0p 2.5p Capital 7.0p 6.5p Total 9.0p 9.0p • Cumulative return to shareholders since launch Net asset value per share 87.6p 85.7p Dividends paid per share* 65.0p 56.0p Net asset value plus dividends paid per share 152.6p 141.7p • Share price at end of year 76.0p 70.0p *Excluding proposed final dividend 2007 2006C SHARES • Net assets £18.9m £19.6m • Net asset value per share 91.5p 94.7p • Return/(loss) per share Revenue 2.3p 1.6p Capital (3.5)p (1.3)p Total (1.2)p 0.3p • Dividend per share declared in respect of the year Revenue 2.0p 1.0p Capital - - Total 2.0p 1.0p • Cumulative return to shareholders since launch Net asset value per share 91.5p 94.7p Dividends paid per share* 2.0p - Net asset value plus dividends paid per share 93.5p 94.7p • Share price at end of year 83.0p 95.0p *Excluding proposed final dividend For further information, please contact: NVM Private Equity Limited Christopher Mellor, Director 0191 244 6000Website: www.nvm.co.ukLansons CommunicationsKaren Mignon 020 7294 3685 CHAIRMAN'S STATEMENT The Chairman of Northern Venture Trust PLC, Professor Sir Frederick Holliday CBEFRSE, included the following points in his statement to shareholders: Results and dividend - ordinary shares The net asset value (NAV) per ordinary share at 30 September 2007 was 87.6pcompared with 85.7p a year earlier. Dividends of 9.0p per share were paid andcharged to reserves during the year. The return per share for the year was10.8p (2006 8.6p), equivalent to 12.6% (2006 10.1%) of opening NAV. This isonce again a satisfactory result. The directors propose an unchanged final dividend of 6.0p per ordinary share,this year comprising 1.0p revenue and 5.0p capital distribution, maintaining thetotal for the year at last year's level of 9.0p. The final dividend will,subject to approval by shareholders, be paid on 14 December 2007 to shareholderson the register on 23 November 2007. This will take the cumulative ordinarydividends paid by the company since launch to 71p per share. Results and dividend - C shares The net asset value per C share at 30 September 2007, after deducting dividendsof 2.0p paid during the year, was 91.5p, down from 94.7p a year ago. The returnper share for the year was minus 1.2p compared with plus 0.3p last year. Thisreflects a provision against one of the fund's investments which at thisrelatively early stage has not been offset by valuation gains elsewhere in theportfolio. The directors propose a final dividend of 1.0p per C share (last year 1.0p),which when added to the interim dividend already paid of 1.0p makes a total inrespect of the year of 2.0p (last year 1.0p). The final dividend will, subjectto approval by shareholders, be paid on 14 December 2007 to shareholders on theregister on 23 November 2007. Investment portfolio The Business Review in the annual report gives details of movements in theinvestment portfolio during the year. In the ordinary share fund, additions toventure capital investments during the year amounted to £1.8 million and salesproceeds were £6.4 million. Significant realisations during the year includedUnion Snack, Computer Software Group and Ithaca Holdings. The C share fund,still in its initial investment phase, completed new investments totalling £5.9million and there were no realisations. Share buybacks and secondary market liquidity The company has continued to buy back shares in the market for cancellation,generally at a 10% discount to net asset value. During the year to 30 September2007 a total of 797,247 ordinary shares, representing approximately 2.1% of theissued ordinary capital at the beginning of the year, were re-purchased at acost of £594,000 - an average price of 74.5p per share. In addition, for thefirst time 37,725 C shares were re-purchased for £32,000, an average price of84.8p per share. Your directors believe that it is in the interests of both the company and itsshareholders that there should be a more active secondary market in thecompany's shares - particularly the ordinary shares, which have been quoted onthe London Stock Exchange since 1995. It is interesting to note that for a sixmonth period in late 2003 and early 2004 the company's ordinary shares werequite actively traded and none were re-purchased by the company. This came toan abrupt end with the introduction of 40% income tax relief on new VCTinvestment with effect from 6 April 2004, which coincided with the move by anumber of VCTs to a policy of buying back shares at a fixed 10% discount to NAVrather than allowing the share price to find its own market level. Subsequently the company has continued to provide liquidity to shareholders bypurchasing ordinary shares in the market at a 10% discount to NAV. As thedirectors do not expect to raise significant new funds from investors in theshort to medium term we are concerned that a continuation of this rigid approachto buy-backs will lead to a gradual diminution of the company's capital base -which in turn could increase the expense ratio and reduce the diversity of theinvestment portfolio. We also wish to encourage demand from secondary marketpurchasers who recognise the unique ability of VCTs to distribute income andcapital gains to their shareholders free of tax. We have therefore decided that whilst retaining the flexibility to buy backshares in the market at the board's discretion, we will no longer seek to useour buy-back authority to maintain a fixed 10% discount to NAV; market supplyand demand will be allowed to set the share price, against the background of ourdividend policy as set out below. Shareholders should be aware that in theshort term this may lead to a fall in the quoted market price. However it isour belief that by achieving a strong return to shareholders through bothdividends and NAV growth, demand for the shares is likely to be increased andthe discount to net asset value may be reduced. The directors have also reviewed the provision of corporate broking services tothe company, as a result of which we have announced the appointment ofLandsbanki Securities (UK) Limited (formerly Teather & Greenwood Limited) asbrokers to the company. Landsbanki will also act as market-makers in thecompany's ordinary and C shares. We do not expect an active market to develop in the company's C shares in theforeseeable future given that under the VCT rules most subscribers will besubject to a three year holding period from March or April 2006, and alsobecause of the relative immaturity of the investment portfolio and consequentlower dividends. However as the C shares are due to be converted into ordinaryshares in the final quarter of 2009 an increase in ordinary share marketabilitywill clearly be in the interests of C shareholders in the medium term. In themeantime the company remains willing to re-purchase C shares in the market at a10% discount as before. Future dividend policy Ordinary shareholders will be aware that our company has established anexcellent dividend record, with dividends totalling 71p per share declared overa 12 year period - an average of 5.9p per year. A dividend of at least 9p pershare has been declared in respect of each of the past four financial years.The directors have recently reviewed the company's dividend policy with a viewto establishing a target level of maintainable dividend yield as a basis forattracting secondary market purchasers, and as a result of this review we intendin future to pay a dividend each year of at least 6p per ordinary share, subjectto the availability of profits. Based on the recent mid-market share price of75p this would represent an annual tax-free dividend yield of 8.0%, equivalentto an 11.9% gross dividend yield to a higher-rate taxpayer. We wish to emphasise that the target dividend of 6p is not a maximum and theboard will seek to increase the distribution by up to a further 3p per sharewhere the investment disposals and profits in a given year make this possible -as has been the case for the past four years. The company's dividend investment scheme will continue to operate, enablingshareholders to re-invest their dividends in new ordinary shares in the companywith the benefit of VCT tax reliefs at the current rates. Annual general meetings In line with our policy of alternating annual meetings between Edinburgh andLondon the forthcoming annual general meeting for 2007 will be held in London on13 December and your directors look forward to meeting as many shareholders aspossible on that occasion. Following a review of the year-end reporting timetable, which has becomedifficult to achieve due to the continuing increase in disclosure requirements,it is intended that the next annual general meeting will take place in January2009 - a month later than would previously have been the case. In order toavoid any delay in distributions to shareholders, dividends in respect of thefinancial year ending 30 September 2008 will take the form of a first interim inJune 2008 and a second interim in December 2008, with no final dividendenvisaged. VCT qualifying status The company retains PricewaterhouseCoopers LLP as advisers on matters relatingto VCT status. The directors are satisfied that the qualifying conditions laiddown by HM Revenue & Customs for VCT approval have continued to be met by thecompany and we expect this to continue to be the case. Prospects The UK economy has achieved a respectable level of growth over the past 12months, but recent events on both sides of the Atlantic have introduced a noteof caution which will no doubt persist into 2008. Your company has continued tomaintain a well-diversified portfolio and although adverse sentiment in thefinancial markets will inevitably impact on some of our investments, we believethe company is well placed to achieve satisfactory performance over the comingyear. PROFESSOR SIR FREDERICK HOLLIDAYChairman The audited financial statements for the year ended 30 September 2007 are setout below. INCOME STATEMENTfor the year ended 30 September 2007 Ordinary shares C shares ---------------------------- ---------------------------- Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Gain/(loss) on disposal of investments - 1,188 1,188 - (98) (98)Unrealised adjustments to fair value of investments - 2,474 2,474 - (382) (382) -------- -------- -------- -------- -------- -------- - 3,662 3,662 - (480) (480)Income 1,535 - 1,535 974 - 974Investment management fee (195) (585) (780) (114) (342) (456)Other expenses (176) - (176) (166) - (166) -------- -------- -------- -------- -------- --------Return on ordinary activities before tax 1,164 3,077 4,241 694 (822) (128)Tax on return on ordinary activities (251) 178 (73) (222) 108 (114) -------- -------- -------- -------- -------- --------Return on ordinary activities after tax 913 3,255 4,168 472 (714) (242) -------- -------- -------- -------- -------- -------- Return per share 2.4p 8.4p 10.8p 2.3p (3.5)p (1.2)p Company ---------------------------- Revenue Capital Total £000 £000 £000Gain on disposal of investments - 1,090 1,090Unrealised adjustments to fair value of investments - 2,092 2,092 -------- -------- -------- - 3,182 3,182Income 2,509 - 2,509Investment management fee (309) (927) (1,236)Other expenses (342) - (342) -------- -------- --------Return on ordinary activities before tax 1,858 2,255 4,113Tax on return on ordinary activities (473) 286 (187) -------- -------- --------Return on ordinary activities after tax 1,385 2,541 3,926 -------- -------- -------- INCOME STATEMENTfor the year ended 30 September 2006 Ordinary shares C shares ---------------------------- ---------------------------- Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Loss on disposal of investments - (431) (431) - - -Unrealised adjustments to fair value of investments - 3,065 3,065 - (78) (78) -------- -------- -------- -------- -------- -------- - 2,634 2,634 - (78) (78)Income 1,754 - 1,754 512 - 512Investment management fee (183) (548) (731) (64) (191) (255)Other expenses (200) - (200) (90) - (90) -------- -------- -------- -------- -------- --------Return on ordinary activities before tax 1,371 2,086 3,457 358 (269) 89Tax on return on ordinary activities (281) 169 (112) (107) 59 (48) -------- -------- -------- -------- -------- --------Return on ordinary activities after tax 1,090 2,255 3,345 251 (210) 41 -------- -------- -------- -------- -------- -------- Return per share 2.8p 5.8p 8.6p 1.6p (1.3)p 0.3p Company ---------------------------- Revenue Capital Total £000 £000 £000Loss on disposal of investments - (431) (431)Unrealised adjustments to fair value of investments - 2,987 2,987 -------- -------- -------- - 2,556 2,556Income 2,266 - 2,266Investment management fee (247) (739) (986)Other expenses (290) - (290) -------- -------- --------Return on ordinary activities before tax 1,729 1,817 3,546Tax on return on ordinary activities (388) 228 (160) -------- -------- --------Return on ordinary activities after tax 1,341 2,045 3,386 -------- -------- -------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 30 September 2007 Ordinary shares C shares Company £000 £000 £000Equity shareholders' funds at 1 October 2006 33,118 19,571 52,689Return on ordinary activities after tax 4,168 (242) 3,926Dividends recognised in the year (3,477) (414) (3,891)Net proceeds of share issues 417 - 417Shares purchased for cancellation (594) (32) (626) ---------- ---------- ----------Equity shareholders' funds at 30 September 2007 33,632 18,883 52,515 ---------- ---------- ---------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 30 September 2006 Ordinary shares C shares Company £000 £000 £000Equity shareholders' funds at 1 October 2005 33,532 - 33,532Return on ordinary activities after tax 3,345 41 3,386Dividends recognised in the year (3,492) - (3,492)Net proceeds of share issues 371 19,530 19,901Shares purchased for cancellation (623) - (623)Expenses charged to capital reserve (15) - (15) ---------- ---------- ----------Equity shareholders' funds at 30 September 2006 33,118 19,571 52,689 ---------- ---------- ---------- BALANCE SHEETas at 30 September 2007 Ordinary shares C shares Company £000 £000 £000Fixed asset investments:Venture capital investments Unquoted 24,996 6,054 31,050 Quoted 2,452 1,389 3,841 ---------- ---------- ----------Total venture capital investments 27,448 7,443 34,891Other quoted investments - 10,845 10,845 ---------- ---------- ----------Total fixed asset investments 27,448 18,288 45,736 ---------- ---------- ----------Current assets: Debtors 350 371 721 Cash at bank 6,008 364 6,372 ---------- ---------- ---------- 6,358 735 7,093Creditors (amounts falling due within one year) (174) (140) (314) ---------- ---------- ----------Net current assets 6,184 595 6,779 ---------- ---------- ---------- Net assets 33,632 18,883 52,515 ---------- ---------- ---------- Capital and reserves:Called-up equity share capital 9,596 15,472 25,068Share premium 9,099 2,030 11,129Capital redemption reserve 1,971 28 1,999Capital reserve - realised 4,174 1,513 5,687Capital reserve - unrealised 7,772 (469) 7,303Revenue reserve 1,020 309 1,329 ---------- ---------- ---------- Total equity shareholders' funds 33,632 18,883 52,515 ---------- ---------- ----------Net asset value per share 87.6p 91.5p BALANCE SHEETas at 30 September 2006 Ordinary shares C shares Company £000 £000 £000Fixed asset investments:Venture capital investments Unquoted 24,577 1,593 26,170 Quoted 3,771 299 4,070 ---------- ---------- ----------Total venture capital investments 28,348 1,892 30,240Other quoted investments - 13,885 13,885 ---------- ---------- ----------Total fixed asset investments 28,348 15,777 44,125 ---------- ---------- ----------Current assets: Debtors 417 467 884 Cash at bank 4,523 3,401 7,924 ---------- ---------- ---------- 4,940 3,868 8,808Creditors (amounts falling due within one year) (170) (74) (244) ---------- ---------- ----------Net current assets 4,770 3,794 8,564 ---------- ---------- ---------- Net assets 33,118 19,571 52,689 ---------- ---------- ---------- Capital and reserves:Called-up equity share capital 9,663 15,500 25,163Share premium 8,814 2,030 10,844Capital redemption reserve 1,772 - 1,772Capital reserve - realised 6,946 1,868 8,814Capital reserve - unrealised 4,850 (78) 4,772Revenue reserve 1,073 251 1,324 ---------- ---------- ---------- Total equity shareholders' funds 33,118 19,571 52,689 ---------- ---------- ----------Net asset value per share 85.7p 94.7p CASH FLOW STATEMENTfor the year ended 30 September 2007 Ordinary shares C shares Company £000 £000 £000Net cash inflow from operating activities 689 448 1,137Taxation:Corporation tax paid (112) (48) (160)Financial investment:Purchase of investments (1,828) (11,544) (13,372)Sale/repayment of investments 6,390 8,553 14,943Net cash inflow/(outflow) from financial investment 4,562 (2,991) 1,571Equity dividends paid (3,477) (414) (3,891) ---------- ---------- ----------Net cash inflow/(outflow) before financing 1,662 (3,005) (1,343)Financing:Issue of shares 429 - 429Share issue expenses (12) - (12)Purchase of shares for cancellation (594) (32) (626)Net cash outflow from financing (177) (32) (209) ---------- ---------- ----------Increase/(decrease) in cash at bank 1,485 (3,037) (1,552) ---------- ---------- ---------- Reconciliation of return before tax tonet cash flow from operating activitiesReturn on ordinary activities before tax 4,241 (128) 4,113(Gain)/loss on disposal of investments (1,188) 98 (1,090)Unrealised adjustments to fair value of investments (2,474) 382 (2,092)Decrease in debtors 67 96 163Increase in creditors 43 - 43 ---------- ---------- ----------Net cash inflow from operating activities 689 448 1,137 ---------- ---------- ---------- Analysis of movement in net funds 1 October 30 September 2006 Cash flows 2007 £000 £000 £000Cash at bank 7,924 (1,552) 6,372 ---------- ---------- ---------- CASH FLOW STATEMENTfor the year ended 30 September 2006 Ordinary shares C shares Company £000 £000 £000Net cash inflow/(outflow) from operating activities 662 (274) 388Taxation:Corporation tax paid (11) - (11)Financial investment:Purchase of investments (1,654) (15,855) (17,509)Sale/repayment of investments 6,214 - 6,214Net cash inflow/(outflow) from financial investment 4,560 (15,855) (11,295)Equity dividends paid (3,492) - (3,492) ---------- ---------- ----------Net cash inflow/(outflow) before financing 1,719 (16,129) (14,410)Financing:Issue of shares 385 20,667 21,052Share issue expenses (14) (1,137) (1,151)Purchase of shares for cancellation (623) - (623)Net cash (outflow)/inflow from financing (252) 19,530 19,278 ---------- ---------- ----------Increase in cash at bank 1,467 3,401 4,868 ---------- ---------- ---------- Reconciliation of return before tax tonet cash flow from operating activitiesReturn on ordinary activities before tax 3,457 89 3,546Loss on disposal of investments 431 - 431Unrealised adjustments to fair value of investments (3,065) 78 (2,987)Increase in debtors (141) (467) (608)(Decrease)/increase in creditors (5) 26 21Expenses charged to capital reserve (15) - (15) ---------- ---------- ----------Net cash inflow/(outflow) from operating activities 662 (274) 388 ---------- ---------- ---------- Analysis of movement in net funds 1 October 30 September 2005 Cash flows 2006 £000 £000 £000Cash at bank 3,056 4,868 7,924 ---------- ---------- ---------- INVESTMENT PORTFOLIO SUMMARYas at 30 September 2007 ORDINARY SHARES Cost Valuation % of net assets £000 £000 by valuation CGI Group 2,325 5,119 15.2TFB Group 886 1,885 5.6Envirotec 812 1,801 5.4Weldex (International) Offshore 200 1,673 5.0KCS Global Holdings 572 1,519 4.5Barony Universal Products 157 1,287 3.8DxS 1,105 1,070 3.2John Laing Partnership 356 1,069 3.2Alaric Systems 1,867 934 2.8Pivotal Laboratories Holdings 714 837 2.5Abermed 600 781 2.3Arleigh International 375 753 2.2ComputerLand UK* 396 730 2.2Direct Valeting 679 679 2.0Interlube Systems 88 655 1.9 -------- --------- ----------Fifteen largest venture capital investments 11,132 20,792 61.8Other venture capital investments 8,544 6,656 19.8 -------- --------- ----------Total fixed asset investments 19,676 27,448 81.6 --------Net current assets 6,184 18.4 --------- ----------Net assets 33,632 100.0 --------- ----------*Quoted on Alternative Investment Market C SHARES Cost Valuation % of net assets £000 £000 by valuation Paladin Group 800 1,041 5.5Promanex Group Holdings 801 801 4.3Astbury Marsden Holdings 800 800 4.2Foreman Roberts Group 800 800 4.2Product Support (Holdings) 800 800 4.2Promatic Group 797 797 4.2Frontier Foods 542 542 2.9IDOX* 298 377 2.0Wear Inns 270 270 1.4Maelor* 199 253 1.3Hat Pin* 149 219 1.2Shieldtech* 248 208 1.1Gentronix 203 203 1.1Brulines (Holdings)* 184 198 1.1Twenty* 198 134 0.7Nightingales Holdings 714 - - -------- --------- ----------Total venture capital investments 7,803 7,443 39.4Listed fixed-interest investments 10,954 10,845 57.4 -------- --------- ----------Total fixed asset investments 18,757 18,288 96.8 --------Net current assets 595 3.2 --------- ----------Net assets 18,883 100.0 --------- ----------*Quoted on Alternative Investment Market The above summary of results for the year ended 30 September 2007 does notconstitute statutory financial statements within the meaning of Section 240 ofthe Companies Act 1985 and has not been delivered to the Registrar of Companies.Statutory financial statements will be filed with the Registrar of Companiesin due course; the independent auditors' report on those financial statementsunder Section 235 of the Companies Act 1985 is unqualified and does not containa statement under Section 237(2) or (3) of the Companies Act 1985. The proposed final ordinary share dividend of 6.0p per share for the year ended30 September 2007 will, if approved by shareholders, be paid on 14 December 2007to shareholders on the register at the close of business on 23 November 2007. The proposed final C share dividend of 1.0p per share for the year ended 30September 2007 will, if approved by shareholders, be paid on 14 December 2007 toshareholders on the register at the close of business on 23 November 2007. The full annual report including financial statements for the year ended 30September 2007 is expected to be posted to shareholders on 15 November 2007 andwill be available to the public at the registered office of the company atNorthumberland House, Princess Square, Newcastle upon Tyne NE1 8ER. ENDS This information is provided by RNS The company news service from the London Stock Exchange